There are a number of “special purpose” credit reporting agencies that people may run into from time to time. There are agencies that specialize in reporting to landlords about tenants. There are business credit reporting agencies. Finally, there are Telecheck and Chexsystems.
These last two are the ones I want to talk about. Telecheck provides info to merchants at point of service regarding taking a patron’s check. As far as I can tell, with actual paper checks going the way of the dodo bird, Telecheck seems to also be fading into the background. I had gone years without a complaint about Chexsystems also until recently. Banks use Chexsystems to screen applicants for new checking accounts. Banks report on history with checking accounts much like merchants report on the history of a consumer using credit.
Understand these key points about special purpose credit reporting agencies. When you are turned down for writing a check (Telecheck) or opening a bank account “Chexsystems”, the party that turns you down has to give you written notice of the reason you were turned down, and give you information on the party they got the information from and the address where to get a copy of the report and how to dispute it. Firms that turn you down are not very good about giving you this notice, and when they don’t, you may be able to sue them under the Fair Credit Reporting Act. You aren’t going to break the bank. ($1000 or less in most cases), but you can sue. If this happens to you, and you are in Indiana, feel free to give me a call at 317-662-4529 or If you are out of Indiana, go to the NACA find an attorney page, at http://www.consumeradvocates.org/find-an-attorney
I strongly suggest that you get your report and review it before you submit your dispute. If you don’t you’re guessing about what is on the report, and there is no need for that.
When I have time, I will try to supplement this post. In the meantime I’m going to give you some links to outside sites.
Here’s the consumeraffairs.com for general information on Chexsystems.
https://www.consumeraffairs.com/chexsystems-news
Stikedebt.org has some letter sthat you can send to Telecheck and Chexsystems. I haven’t vetted these letters, but they might be useful
http://strikedebt.org/drom/appendix-b/
You can complain about the special purpose credit bureaus, and the companies that turn you down without notice or the opportunity to challenge the decision to the Consumer Financial Protection Bureau. Here’s the CFPB’s complaint page.
http://www.consumerfinance.gov/complaint/
Here’s a link to a page that touts 9 banks that don’t use Chexsystems. These pages come and go, and the lists seem to go out of date quickly. If this list ends up being inaccurate, go on Google and look for another one.
https://www.gobankingrates.com/banking/9-banks-dont-use-chexsystems/
Do not pay for a list of non-chexsystems banks! Even the paid lists have a reputation for being inaccurate.
Here’s a local Television Story on Chexsystems